Are You a Designated Employer? The 2025 Test Explained
Whether your business must run the full employment equity programme comes down to one question: are you a designated employer? The answer changed fundamentally on 1 January 2025, when the EE Amendment Act replaced the old two-track test (headcount OR turnover) with a simple headcount line. This guide explains the current test, who is caught regardless of size, and exactly what designation switches on.
- ✔50 or more employees = designated employer. That is now the whole test for private businesses.
- ✔Turnover thresholds no longer exist — the 2025 amendments repealed them.
- ✔Municipalities, organs of state and collectively-designated employers are designated at any size.
- ✔Non-designated employers still carry chapter 2 duties: no discrimination, equal pay.
- ✔Crossing 50 mid-year? Newly designated employers report in the next cycle.
The designated employer test after the 2025 amendments
Under the amended Employment Equity Act, a designated employer is: (1) an employer with 50 or more employees; (2) a municipality; (3) an organ of state; or (4) an employer bound by a collective agreement that designates it. That is the entire list. The previous track — employers below 50 staff but above sector turnover thresholds — was repealed, which the Department framed as reducing the regulatory burden on small business.
| Before 1 Jan 2025 | From 1 Jan 2025 | |
|---|---|---|
| Headcount test | 50+ employees | 50+ employees (unchanged) |
| Turnover test | Schedule 4 thresholds by sector | Repealed — no longer applies |
| 10–49 employees above turnover | Designated (full programme) | Not designated (chapter 2 only) |
| Small employers 1–49 | Often designated via turnover | Never designated by size alone |
The 50-employee count includes permanent, fixed-term and part-time employees on your establishment. Genuine independent contractors are excluded — but the contractor vs employee test applies, and misclassification to duck the 50 line is not a strategy, it is evidence.
What designation switches on — and what it does not
Designation activates chapter 3 of the EE Act — the affirmative action programme: consult with a representative forum, analyse your workforce against the economically active population, prepare and implement an employment equity plan with annual targets aligned to sector targets, assign a senior manager responsibility, and submit EEA2 and EEA4 reports every year.
Designation changes nothing about chapter 2 — because chapter 2 already applied to you. The prohibition on unfair discrimination, the equal-pay-for-equal-work duty and the harassment rules bind the five-person bakery as firmly as the five-thousand-person mine. Small employers who hear ‘not designated’ as ‘EE does not apply to me’ are reading only half the Act.
Crossing the line: growth, newly designated employers and timing
Businesses do not stay still — a 46-person company wins a contract and hires ten people, and the EE question arrives with the growth. The Act accommodates this: employers who become newly designated late in the reporting cycle (on or after the first working day of April) submit their first report only in the next cycle. The practical sequence when you cross 50: start the consultation and analysis immediately, build the plan during the current cycle, and be ready to report in the next.
- Headcount fluctuates around 50? Assess on your actual establishment, not your quietest month.
- Groups and related companies: count per employer entity, not per brand.
- Seasonal peaks with genuine temporary staff still count while employed.
- Keep the designation analysis in writing — it is the first thing a DG review asks for.
Non-designated but tendering? The compliance certificate still matters
Here is the twist that keeps small employers in the system voluntarily: the section 53 EE Compliance Certificate — required for state contracts — is available to both designated and non-designated employers. Non-designated employers confirm their status on the EE online system, meet the baseline requirements (NMW compliance, no discrimination findings), and request the certificate when a tender demands it.
So the small-business position in one line: no plan, no reports — but chapter 2 fairness always, and a certificate when the state is your customer. The full framework is in the EE and B-BBEE pillar guide.
- Employment Equity Act 55 of 1998 (as amended)
- Department of Employment & Labour — EE online system
- Sector targets determination — April 2025
Always confirm current requirements with the official source — rules and deadlines change.
- ✔B-BBEE affidavit assistance
- ✔CSD registration support
- ✔Tax compliance status & LOGS guidance
Frequently asked questions
What is a designated employer in South Africa?
Since 1 January 2025: an employer with 50 or more employees, a municipality, an organ of state, or an employer designated by collective agreement. The old turnover thresholds were repealed by the EE Amendment Act.
I have 35 employees — do I need an employment equity plan?
No. Employers with fewer than 50 employees are not designated and need no EE plan or annual EE reports. You must still comply with chapter 2: no unfair discrimination, equal pay for work of equal value, and no harassment.
Do part-time employees count toward the 50?
Yes — the headcount covers employees on your establishment, including part-time and fixed-term staff. Only genuine independent contractors fall outside the count.
We just hired our 50th employee — when must we first report?
Employers newly designated on or after the first working day of April report only in the next cycle. Use the runway: begin consultation and workforce analysis now, build the plan, and submit your first EEA2/EEA4 in the following reporting period.
Last reviewed: July 2026 · How we research our guides
EmployerGuide.online provides general information about South African employer obligations — not legal, tax or professional advice for your specific situation. Laws, rates and deadlines change; confirm current requirements with the official sources linked above, or ask Admin Boss. See our disclaimer.